Chapter 10 leases

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What are the 2 characteristics of a lease?

A Conveyance by the landlord To the Tenant of an estate in real property covering the premises leasEd A contract between the landlord and tenant, which governs both the landlords delivery and maintenance of the premises and the tenants possession of, use of, and payments for the premises These 2 factors are known as the dual legal nature of a lease

What is a sandwich lease

A sandwich lease is a leasehold interest in a property that lies between the primary, or ownership, interest, and the operating, or tenancy, interest. This means that a Lesee or sublessee Who holds a sandwich lease is both a tenant and the landlord to the same property

What is a security deposit

A sum provided by a tenant to a landlord to ensure the landlord is not left with extraordinary expenses or unpaid rent when a tenant vacates

There are 4 types of leasehold estates. What are they ?

An estate for years An estate form period to period Estate at will Estate at sufferance

The maximum allowed security deposit for a residential property in addition to first months rent are as follows

For an unfurnished rental, two months rent For a furnished rental, three months rent

Actual Eviction

The landlords remedy to regain possession of property

Constructive Eviction

This is the tenants remedy if property is not habitable. (Tenant must vacate property, send notice to the landlord telling him/her if the problem, and put the rent money in escrow until the issue can be resolved

Estate from period to period

•also known as periodic tenancy, or month to month lease •may be terminated by either party by written notice equal to the term of the tenancy or 30 days, whichever is less •no definite ending date. (This type of lease renews itself for whatever period of time that was called for in the original agreement or whatever is agreed upon in the actual lease.) •most apartment leases are estates from period to period of the tenant is required to give notice to terminate

Estate for years

•has definite beginning and ending date •it is not necessary to give notice to the landlord to terminate an estate for years •renewal is NOT automatic, when this type of lease is over, it's over •many commercial leases and some apartment leases are estates for years •this type of lease can be for any amount of time •a 1 day lease to rent a hotel room has a definite beginning and ending so it would be considered an estate for years

Estate at will

•landlord lets you stay without a lease •notice can be given by either party without warning •death of either party immediately terminates an estate at will

Estate at Sufferance

•when a tenant stays past the term of the lease, he/she is known as a holdover tenant because he/she is unlawfully in possession of the property •the landlord must evict the tenant through the court. (He cannot lock the tenant out, turn off utilities, or forcibly remove the tenant

Additional notes you must know regarding California leases and rent

In case of a periodic tenancy, the lease agreement must state the periods involved By law, unless a lease agreement states otherwise, rate becomes do only at the end of the term. However pre-printed lease forms usually specify the rent is due on the first day of each month Regarding an estate for years situation, if there is no due date given in the lease agreement, then the rent is due on the last business day of the calendar year Contract rate is the term given to the actual amount of rent to be paid;This is the payment that is specified in a lease contract when the lease is signed, as the amount due for use of the property. Economic Rich, on the other hand, is not the same as contracted with. Economic rent is the amount of rent that a property could yield, were available for lease in taking into account the current market Note that any amount of rent paid in advance such as first and last months rent to the landlord must be claimed on the landlords income taxes for that year Rent control is a government regulation of the amount of rent a landlord may charge a tenant. Under California law, no government agency may adopt any rent control restrictions on non-residential property

In addition to the minimum requirements for A lease There are other contractual issues that should be addressed before a lease is drawn up between the parties. They are

It must have any renewal or extension provisions in at least eight point Bold face type to be valid The security deposit Any assignment and subleasing options Liabilities for injuries and repairs The conditions and provisions of a lease The termination of the lease

A California lease has the following minimum requirements

It must state the length or duration of the lease It must include the amount of rent and the date on which it is to be paid It must contain the names of the parties ( lessee and lessor ) It must include a sufficient description of the property It must give evidence of both the landlords and the tenants intent to create a landlord tenant relationship

Leasehold estates are sometimes called

Less than freehold estates

What is a lessor and lessee?

Lessor=landlord Lessee=tenant

Leasehold Estate

" renting " or " leasing "

Subletting, or subleasing, is the partial transfer of a tenets right in a rental property to a third-party.Under a sublease, the less he becomes a landlord and leases to her own tenant. The person who is the original lessee becomes the sublessor, while the new Lesee is known as the sublessee

Remember that both assignment and subleasing transfer possession only not ownership

Types of leases

Ground lease- long term lease, usually 99 years; tenant may build on a property with a ground lease, but property is still the landlords Index lease- lease is based on some type of index, such as cost of living, etc. usually adjusts upward Appraisal lease- a lease which states a date in the future for a new appraisal ( if the appraisal is higher than the last appraisal, the rent will go up accordingly ) Graduated lease- cost goes up at regular intervals Net lease- the tenant has agreed to pay ownership expenses, usually utilities, property taxes, and special assessments Net-net lease- tenant pays for insurance as well Net-net-net lease ( aka triple net lease ) - tenant also pays for some agreed upon items of repair and maintenance Escalator clause- a clause in a lease in which the parties agree to an adjustment of rent based on set increases in taxes, insurance, maintenance, and other operating costs Non-disturbance clause- a mortgage clause which requires that tenants cannot be disturbed if the property is foreclosed upon Economic rent- currently referred to as market rent, it is the rental income that real estate can command in an open, competitive market at any given time, in contrast with contract rent, or the income actually received under a lease agreement.

California statute of frauds requires a lease to be in writing if it either

Has a term longer than one year or Has a term less than one year, which expires more than one year after the agreement is reached. (This could occur if the parties made the lease agreement in advance of the actual commencement of the lease;For example, in June for an 11 month lease that wasn't to begin until September, thereby extending the contractual relationship for longer than a year, even if the months between June and September we're only a pre-tenancy period.)

If there is no damage or cleaning required to the vacated property, then the landlord has a maximum of 21 days from the date of the tenant vacating the property to refund the security and cleaning deposits

However if either all or a portion of the deposit is to be withheld from the tenant, then the landlord must give that tenant again, within 21 days an itemized, written statement of the items and their charges, under section 1950.5 G 1 through three of the California Civil Code

What must a valid lease contain?

Revisionary right or interest by the lessor (owner); while the possessory rights belong to the lessee. Lessor (landlord) is owner of property being rented, while lessee (tenant) is person renting or leasing property

What is a lease?

Oral or written agreement that creates and governs, by express or implied terms, a landlord-tenant relationship


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